Canada: Employment report provided a mixed bag of indicators – CIBC

Data released on Friday showed that Canadian employment rose by 60,000 in June, above the 20,000 expected. Analysts at CIBC point out that employment growth was brisk in June, however, they warn that rapid population growth and a rise in participation meant that the unemployment rate rose two ticks to 5.4%, while wage growth decelerated by more than anticipated. 

Key quotes:

“This morning's data release was no slam dunk for the Bank of Canada, with a rise in the unemployment rate and slowing wage growth suggesting that labour market conditions are loosening. However, the data are probably just strong enough to see policymakers pull the trigger on another 25bp interest rate hike next week, rather than wait until September as we had previously forecast.”

“We still think that the rate of 5.0% reached at the time of the next hike will prove to be the peak, as evidence that the economy is slowing appears to be mounting.”